Economics 8100
Applied Microeconomic Analysis / Fall
2002
Bruce A. Seaman, Ph.D.
LOGISTICS:
MW:
Comp. # 83317.
Office:
636 CBA;
Office
phone: 404-651-2775;
e-mail: secobas@aol.com (home).
Office
fax: 404-651-4985.
CATALOG
DESCRIPTION: This course provides comprehensive coverage of microeconomic
topics by analyzing the applications of the theory. A graphical and intuitive approach is
stressed in addition to the mathematical.
Topics include both the standard and the new
consumer theory, production and cost analysis, modern theories of the firm and
markets, and basic welfare economics.
Applications useful to business students are also provided.
PREREQUISITES: Econ 3910 or MBA 8403 (intermediate micro
theory, or MBA micro), and Econ 6030 or Dsc
8040 (basic calculus and algebra).
TEXTS: Robert H. Frank, Microeconomics and
Behavior, Fifth Edition, McGraw-Hill, 2002.
Designated "F" in the reading assignments.
The 4th edition has essentially the same chapters, but with some
differences in content and page numbering).
Note: From the Preface (usually the last page), you
will note the website address for this text from which you can access
appendices and the answers to all end of the chapter problems (accessible from
the instructor's manual when you use "frank02" with password
"instructor" - all lower case).
Walter Nicholson, Microeconomic
Theory: Basic Principles and Extensions, Eighth Edition, Dryden, 2002. Designated "N" in
the reading assignments. Again,
there is almost no change in chapter numbering between the 8th and
the 7th editions.
ADDITIONAL
MATERIALS: A few carefully selected
journal articles will be distributed to exhibit particular theoretical tools of
analysis as they are actually used by researchers. An effort will be made to balance these by
"business field" to exhibit the contributions of economics to the
various related disciplines. WebCt is used to
distribute various lecture supplements, exams and some readings. Therefore, please check the Econ 8100 WebCt pages regularly.
For
sample exams, see http://www.gsu.edu/~ecobas/ecobas.html (my web-page), or WebCt,
which contains a large amount of relevant material. These will serve as problem sets and
occasional discussion topics during class. Answers to selected end of chapter
questions are provided in the Nicholson text.
For the Frank text, problem solutions are available on his web page
using a password, as noted above.
IMPORTANT
UNIVERSITY POLICY STATEMENT: The instructor is required to report any student
who has ceased to attend class and give that student a WF (withdrawal failing)
as of a date approximately at the mid-point of the semester. Any such student receiving financial aid may
be required to refund any financial support.
Therefore any student who for legitimate reasons
(illness, family crises etc.) must be absent from class for any period of time
exceeding 2 classes is strongly advised to inform the instructor in advance.
COURSE
PHILOSOPHY: Pedagogically, this course
follows the same philosophy that has led to
"The course tries to present a rigorous
and systematic statement of the principles economists have
developed to understand the allocation of resources. The emphasis, however, has been on the value
of these principles in understanding the world about us. (And) the most efficient way to learn
economic theory is to solve the many problems that test one's
understanding."
Gary Becker (Nobel
Prize 1992), from the Preface to his Economic Theory, Alfred A. Knopf,
1971.
"These days a book in microeconomics
cannot contain a single derivative, or even very many equations, yet send the
message that the form of economics is its scientific substance. The students learn economic calculus before
they learn to reason economically, and their capacity for reasoning is
permanently damaged. The point is not to
banish formal training from economics, but to place it at the right stage of
the educational process."
Deirdre McCloskey (Univ. of
"I wrote Microeconomics and
Behavior in the conviction that the teaching of intuition and the teaching
of technical tools are complements, not substitutes. Students who learn only technical tools
rarely seem to develop any real affection for our discipline, and even more
rarely do they acquire that distinctive mindset we call 'thinking like an
economist.' By contrast, students who develop economic intuition are stimulated
to think more deeply about the technical tools they learn and to find more
interesting ways to apply them. Most
important, they usually end up liking economics."
Robert Frank (Cornell Univ.; Ph.D.
UCLA), from the Preface of the text, exhibiting the perspective of one lucky
enough to be educated by that "classic" text of non-technical rigor, University
Economics, by UCLA professors Armen A. Alchian and William R. Allen, Wadsworth, 1967.
"In almost anyone else's hands, this
model would have got bogged down in a mathematical morass of matrix inverses
and fixed points. It needed Krugman's deeper understanding of the problem to cut it
down to its essentials and express the argument in simple diagrams. As he himself says, 'often the truest
sophistication is finding a way to express novel ideas with no more than a
diagram or a numerical example.'"
Avinash Dixit praising the 1991 John Bates Clark Medal winner, Paul
Krugman, (in particular some of his work on strategic
trade theory), Journal of Economic Perspectives, Spring
1993, p. 182.
COURSE
REQUIREMENTS: A take-home midterm exam
plus a take-home final exam are planned.
There is a slight chance that a shorter exam will also be given prior to
the final exam. The midterm exam is
planned for distribution October 2, and is due the following Monday, October 7
at the beginning of class. Note that the
exams are not formally comprehensive, but focus on new topics. Assigned problems should be completed to
prepare for the exams, but will not be graded.
Class discussion is encouraged. Classes are missed strictly at your own
risk, given the supplemental material to be presented and the problems to be
discussed.
OFFICE
HOURS: Appointments are easily
made. The best "walk-in" times
are after class on MW, but it is always best to call first.
COURSE
SCHEDULE: (Problems will be assigned
separately); October 11 is the last day to withdraw and receive a
"W."
DATES TOPICS AND ASSIGNED
(Includes Appendices
unless specifically excluded. The Frank appendices are at
designated website)
8/19:
Introduction/Background/Logistics.
8/21: The core concepts of microtheory; initial applications
F: Chs. 1 and 2
N:
8/26: Supply and demand and initial
applications
F:
N: Review Ch.
2 as basic math background
8/28: Finish supply and demand
applications; initial sample problems.
Begin constrained optimization
analysis.
F:
N:
9/2: No Class; Labor Day
9/4: Constrained optimization and choice
theory: extensions and applications; links to demand and elasticity; income vs.
substitution effects and applications
F: Chs 4 and 5
N: Chs. 4
and 5
9/9: Further applications of choice theory:
public policy issues;
inter-temporal choice; Relationships among elasticities;
the Slutsky equations (Hicks vs. Slutsky
analysis)
F:
N: Chs. 6 and 7
N:
9/11: Problem-solving; review of sample
exams
9/16: Additional applications and journal
articles; Finish reading above text material
"Some Evidence on the Alchian
and Allen Theorem..." Bertonazzi et a Economic
Inquiry, July 1993
"The Effect of
Compensation Awards Upon Consumption and Savings," Slesnick and Dolin, Journal of
Forensic Economics, May
1988
AThe Valuation of Lost Household Services in Partial
Disability,” Cases, Burns and Faurot, Journal of
Forensic Economics, Fall 1995
9/18: Further discussion
of above articles from 9/16; Labor supply decisions and human resource
management problems
F:
N:
9/23: Uncertainty
and Attitudes toward risk (standard approach):
F:
N:
9/25: The economics of risk: Alternative viewpoints (Kahneman-Tversky and the “Behavioralists”)
F:
Distribution of further
articles re: behavioral economics
9/30 Cognitive limitations; the debate
about taste formation and
stability;
F:
N:
Handout on
10/2: Exam I distributed; Additional
discussion of taste formation and taste differences;
Overview of the Becker approach
10/7: Midterm exam due (beginning of class); continue
analysis of
Becker “new consumer theory”
Possible
supplemental handout material
10/9: Return and discuss midterm exam
10/14: Overview of production and cost
theory; Modern theory of the
firm vs. traditional neoclassical theory
F: Begin Chs. 9 and 10
N: Begin Chs. 11 and
12
10/16: Production and cost applications
continued.
F: Chs. 9 and 10
N : Chs. 11 and 12
10/21: Sample exam problems; extension to
theory of the firm
F:
10/23: Profit maximization and the purely competitive model
F: Ch.11 (conclude)
N:
10/28: Applications of the purely competitive model
N: Chs. 14 and 15
10/30: Competitive applications concluded;
selected general
equilibrium topics
N:
N. Ch. 17, to page
471 only
11/4:
Begin market power applications
F:
N:
11/6: Monopoly model and applications concluded
F:
N:
11/11: Selected topics from oligopoly modeling
F:
N:
11/13: Conclude “traditional” oligopoly
topics; into to game theory
N:
11/18: Conclude game theory; Labor and input
market analysis:
selected topics
F:
N:
11/20: Input analysis continued; begin
sample exam problems
F:
N:
11/25: Conference scheduling conflict
(GRA-led problem session tentatively
scheduled
11/27: No class; Thanksgiving
12/2: Selected topics in capital theory
F:
N:
12/4: Special pricing topics; transfer pricing
and vertical issues; Intro to tying-contracts (only if time
allows; otherwise catch- up on
previous topics); distribute final exam
Articles to be
distributed
The take
home final exam is due 5:00 P.M.,